Where the US Homeowners Insurance Premium Dollar Goes—2000 and 2001

Homeowners insurance accounted for 10.6% of all P/C premiums and 22.3% of all personal lines insurance in 2002.

In 2001 (latest data available at close of publishing) claims accounted for $89 of every $100 earned in homeowners insurance premiums, up significantly from $77 reported in 2000.

US expenses—commissions, state premium taxes, general overhead expenses—accounted for $29 out of every $100 in premium dollars earned in 2001 (compared to $31 in 2000).

2001 investments added $3 to income, declining from investment gains of $12 in 2000. Despite the $3 investment gain in 2001, insurers realized no after-tax profit due to higher claims and expenses. There was a $3 after-tax profit reported in 2000.

Of note, property damage claims and theft in 2000 and 2001 accounted for 81% of claims payments (74% in 1998), and liability claims accounted for 6% in 2001 and 6% in 2000 (10% in 1998). The cost of settling these claims in 2001 accounted for the remaining 13% of total claim costs, compared to 14% in 2000.

Note: These charts are based on every $100 of revenue plus investment income of $3, for a total of $103.